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Capital for advertising

How much capital is necessary set aside for first year of advertising and which types give you the best bang for the buck to get your name and your brand name out? We are trying to brand our product and besides guerilla marketing, I wanted to know what everyones experience have been with different advertising methods and their success, failure.

Zero.
It depends how fast you need to grow, and how tasty or crappy your beer is that you need to push beyond positive word of mouth.
My experience is that the people convinced by advertising are the ones that will first leave you for the newest advertised product.

Totally agree, ZERO. For big bang for buck, go for free PR in local radio, newspapers, etc. These people are crying out for content.

Classic example of why advertising doesn't work for a startup. We've maybe had 15 articles in a local paper and still have people that 'can't believe they haven't heard of us'. The newspaper has been trying to sell me advertising space since we started, my theory is that if people haven't seen the articles, then there is no way they would have seen our corner advert on page 13 that cost x hundred. Waste of precious cash.

If you actually have money to spend, spend it on making sure your company has a professional feel about it from the outside, like a decent web-site, decent logo, brand design. etc. and of course, do your best to get the beer right.

I absolutely agree with Moonlight and Rosie. Skip the advertising crap. Nobody's reading newspapers anymore. TV and radio ads are hellishly expensive. The one perfect example that I point to from our own experience is when I spent $350 on a 1/4 page ad in a local paper announcing that we had begun bottling our beers. It also included a tiny spot about selling dog treats that are made with our spent grain. ONE (and I do mean ONE) old man came to our tasting room because he had seen our ad. He came for the damn dog treats. Basically, I spent $350 to sell a $4.50 bag of dog treats. This is just the best example of why it's a waste to spend money on advertising.

The best things you can do are the following:
1) tasting room (if you're not starting a brewpub)
2) do as many beer tastings as you can for the first year or so: after a while they become a waste of time and beer, but you'll know when you reach that point; after that, you can pick and the choose the most effective beer tastings; the most important thing is that you give consumers lots of chances to try your beers for free and that you get public exposure
3) social media/networking: you have a targeted, receptive audience of people who WANT to know what you're up to; newspaper ads are like carpet bombing - by reaching everyone you might hit your intended target; FaceCrack, Twitter, etc. is like a smart bomb - you hit exactly who you want to hit every time; your audience has a direct connection to you and therefore they have access to all the information they want about your brewery

In a few years, when you have money to blow on ads, go for the beer industry rags first - Ale Street News, The Brewing News, Celebrator and any other local or regional beer magazines. Again, you're hitting a targeted audience.

Coming from another perspective - I don't own a brewery - I'm a freelance photographer (with a strong interest in beer/breweries) who shoots primarily for magazines.

When I'm shooting, I always ask business owners what works, and from the stories I hear, what works best is a combo of both editorial (yes, editors are always looking for a story - they have pages to fill every day/week/month.) and a steady run of advertising. Doesn't need to be a full page - just needs to be there month after month after month. Some folks read every page. Some folks read only every third issue because they're busy. Some folks only look at the pictures. Whose to say your future customer read the newspaper the 15 times they wrote about you.

The biggest mistake I hear is the owner who pays a ton for one full page ad - thinking that EVERYONE is going to see it and get excited about their business. Doesn't work that way. Maybe by the fourth or fifth time they see it, they'll start to think about stopping by. And if your advertising is reinforcing editorial appearances, then all the better.

But all that being said - I don't advertise my photography business cuz it's too damn expensive.

I would set aside a limited amount for small ads in festival programs, the local brewspaper or a local group you support that also supports you. As a small business, you are a member of the community and will be asked to contribute to charities, participate in local fund raising events, etc... We don't give any beer away but we do support local programs as we are asking them to support us.

There's free media on the internet. As much as brewers hate to admit it, Facebook and Twitter are excellent sources of advertising where your loyal beer drinkers can keep tabs on what's going on with your beer. And it's absolutely free. You could also start a blog, beer drinkers love blogs and they love knowing as much as they can about the beer. Right down to what time you mashed in today. That makes them feel like they're part of the process and that they have an "inside connection" as to when the freshest beer comes out. I agree with everyone else that spending money on tv, radio, billboards is just a waste of money. Have a nice clean identity package with a good website and if your product is good, word of mouth will follow.

Skip the advertising spend. Focus instead on talking to people in person. Get people to understand who you are and what you're doing and they will take it from there.

The way social media has changed marketing these days, a small business or startup is better off focusing on developing a connection with customers, who then (if you do it right) end up spreading the word for you. These days no one trusts traditional advertising anymore and "peer recommendations" are really the only things that have an impact. Spend some time using free tools to let people know where they can find you (Twitter, Facebook, friendly beer bloggers, etc.) and announce your releases or other news through the trade papers (which the bloggers will pick up) and don't spend a dime on advertising. More effective and effectively free - just requires that you carve out some time to go into the market and talk to the people... and drink beer with them...

Wish I could give you some sort of formula. you should budget something for advertising and sponsorship but that number should be connected to anticipated sales as some sort of percentage that you think (given budgetary constraints for everything else) you could afford.

The following quote is from a plan I wrote for a client a few years (10) ago. Perhaps still relevant for reference anyhow. The client in question is a Canadian company. The definition of a small brewer in this plan is < 25 000 hL/year. The plan makes no reference to medium sized or regional breweries. I would think it would come in somewhere between the small and large brewer percentages. Your local mileage may vary. The numbers are still very real for the Canadian market.

"This contrasts with market competitors as follows: (i) small brewers typically spend 0.5% of gross sales or less on advertising/sponsorship (A/S), with many spending nothing; (ii) large imported brands may be supported by a annual A/S spend of about 1% of gross sales; (iii) small imported brands are often unsupported via A/S or have only a nominal ad budget; and (iv) large domestic brands are typically supported by an A/S budget of 7% or more of gross sales. "

Rob raise a very valid point regarding sponsorship budgeting. If you want to become part of the fabric of your community, you have to participate in the weaving process.